Ghostriders co-owner entangled in alleged ponzi scheme

A co-owner of a Minnesota powersports dealership is at the heart of a fraud scheme that allegedly siphoned money from a ponzi scheme to other businesses, including the dealership.

The FBI is investigating an alleged Ponzi scheme involving Corey N. Johnston, 40, of Lakeville, Minn., according to federal and state court documents obtained by the Grand Forks Herald.

Johnston’s business services company, First United Funding LLC, allegedly sold $234 million worth of loan participation agreements to about 18 banks, on loans worth only $204 million, fraudulently taking in “tens of millions of dollars,” according to filings by a court-appointed receiver.

No criminal charges have been filed, though an FBI agent said in a December court filing that money from new loan participants was used to pay earlier loan participants, a pattern that he noted is typical of a Ponzi scheme. Among other allegations, investigators say Johnston funneled money from the scheme to GhostRiders motorcycle shop in Lakeville and its affiliated Renegades Bar and Grill.

Patrick Finn, a SVP of Lighthouse Management Group of Maplewood, is receiver for First United. He says in court documents that Johnston improperly spent $7.5 million in First United funds on personal expenses or on affiliated businesses.

First United “drastically oversold” participations on some loans but not others, Finn said. But tracing all of the First United transactions would involve following more than $1.4 billion in transactions over many years through many accounts.

Attorneys for Johnston and other defendants said only that they are cooperating with the investigation.